North America-Focused Hedge Funds Post Strong Returns In November

Preqin All-Strategies Hedge Funds benchmark records further gains in November (1.00%) as industry looks to take performance momentum into 2017

North America-focused hedge funds recovered from losses suffered in October (-0.69%) to post returns of 2.89% through November, the greatest of any region. This takes North America funds’ 2016 YTD performance to 9.09%, also the highest of any region. By contrast, Europe-focused hedge funds posted smaller gains of 0.09% in November, while Asia-Pacific funds suffered losses of 0.47%, taking YTD performance to 1.07% and 1.88% respectively for the two regions.

Overall, November saw positive performance across the hedge fund industry; the Preqin All-Strategies Hedge Fund benchmark recorded gains of 1.00% in November, taking 2016 YTD performance to 6.34%. All top-level strategies saw positive returns for the month, with event driven strategies seeing the biggest gains of 2.34%. Through 2016 so far, event driven funds have returned 10.74%, the highest of any strategy, while relative value funds have had the lowest YTD performance, returning 4.08% as of the end of November.

Hedge Funds – Other Key Performance Facts:

Emerging Markets Lose Out: In November, emerging markets-focused hedge funds suffered losses of 1.73%, while developed markets posted gains of 0.96%. However, in 2016 YTD vehicles focused on emerging markets have returned 7.91%, above that of developed markets (+5.20%).

Large Funds Return to Form: In 2016, Preqin’s performance by size classification* breakdown in 2016 has largely seen smaller funds post the highest returns. However, in November funds larger than $1bn posted 1.10%, the best performance of any size, with emerging and small funds making gains of 0.89% and 0.97% respectively.

CTA Struggles Continue: CTAs ended their run of negative performance in November, as they returned 0.07% for the month. Despite this, CTA funds have made YTD losses of 0.30%, and 12-month performance is also negative, standing at -1.69%.

Positive Month for Activist Funds: 2016 has been a positive year for activist hedge funds so far; the trading style recovered from losses in October to post returns of 2.34% in November, and have now made gains of 8.67% in 2016 YTD. Volatility-focused funds also saw gains of 0.85% in November, and have posted only one month of negative performance through the year so far.

Comment:

“Hedge funds focused on North America generated healthy performance in November and exceeded all other regions, as firms capitalized on opportunities arising from the US election result. The majority (53%) of hedge fund managers surveyed by Preqin in November said that they expect the performance of their portfolio to profit as a result of the US election over the remainder of 2016. Europe- and Asia-focused funds have seen more marginal gains, but all regions have performed positively over the year so far.

Overall, the hedge fund industry has rebounded well over 2016 from the difficulties seen at the beginning of the year, and can approach 2017 with optimism, as performance is on track to exceed 2015 and 2014. Although the industry benchmark has not made monthly gains exceeding 1% across most of the year, the run of positive performance from March to September was the longest consistent run of gains seen since 2012-13.”